Capital, Wages and Growth: Theory and Evidence
AbstractReturns to scale to capital and the strength of capital externalities play a key role for the empirical predictions and policy implications of different growth theories. We show that both can be identified with individual wage data and implement our approach at the city-level using US Census data on individuals in 173 cities for 1970, 1980, and 1990. Estimation takes into account fixed effects, endogeneity of capital accumulation, and measurement error. We find no evidence for human or physical capital externalities and decreasing aggregate returns to capital. Returns to scale to physical and human capital are around 80 percent. We also find strong complementarities between human capital and labor and substantial total employment externalities.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 2199.
Date of creation: Aug 1999
Date of revision:
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Other versions of this item:
- Antonio Ciccone & Giovanni Peri & Douglas Almond, 1999. "Capital, wages and growth: Theory and evidence," Economics Working Papers 389, Department of Economics and Business, Universitat Pompeu Fabra, revised May 1999.
- Antonio Ciccone & Giovanni Peri & Douglas Almond, . "Capital, Wages, and Growth: Theory and Evidence," Working Papers 152, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University.
- J3 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs
- O0 - Economic Development, Technological Change, and Growth - - General
- O4 - Economic Development, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
- R0 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General
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